We follow a highly structured, systematic, and disciplined investment strategy designed to maximize wealth in a conservative, well thought out manner.”

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Our Investment Philosophy
– The Details –

Principia client portfolios are based on several core investment philosophies designed to help maximize return while controlling risk. This academic driven philosophy closely integrates client's personal goals with their investment portfolio.

  1. The vast majority of traditional active money managers underperform the market indexes every year. Statistics show that those who don't underperform do so in subsequent years. Markets are efficient. And, it is impossible to consistently "beat the market".
  2. Conventional indexes (e.g. S&P 500) are seriously flawed as investment vehicles and serve only as gauges for market performance.
  3. Accordingly, we utilize core and asset class portfolios with very low costs - ideal building blocks for precise asset allocation.
  4. Asset Allocation is the most important decision you will make. This decision is at the center of our investment process.
  5. We do not believe it is possible to consistently predict or "time markets" in any profitable manner. Furthermore, such activity merely adds speculative risk, increases costs, and creates unnecessary tax liabilities.
  6. We utilize portfolio design methods based on Nobel Prize winning "Modern Portfolio Theory".
  7. Broad global diversification is essential. Concentrated investments add risk (portfolio fluctuations) with no additional expected return.
  8. Diversification should include exposure to fixed income, which is best kept short in maturity and high in credit quality.
  9. For those clients who qualify, and if it is deemed appropriate, we may recommend allocating a portion of a portfolio into alternative investments that can significantly enhance returns and diversification.
  10. The only thing guaranteed in investing is that you will keep more if you spend less. Accordingly, eliminating excessive costs is critical to increasing long-term performance.
  11. The management of tax liabilities is just as important as expenses to overall investment returns.
  12. Systematic rebalancing is an effective method of reducing risk and increasing long-term returns.

OVERVIEW

  • Hundreds of studies have found that the past performance of active managers is unrelated to future performance
  • Passive investing is based on asset classes, that is, groups of securities with similar risk and return characteristics that are at least somewhat uncorrelated with each other
  • Our investment technique, known as passive asset class investing, is rooted in research by two of academia's leading financial economic researchers, Eugene Fama and Kenneth French